Yahoo 2005 Annual Report Download - page 5

continue to inform, engage, educate, and
entertain our users. We are very pleased with
the increasing user engagement on Yahoo!,
which gives us a considerable advantage as
monetization opportunities on the Internet
continue to grow.
Marketing Services
By building the leading online services and
attracting the world’s largest and most engaged
online audience, Yahoo! has created among the
most effective and creative array of advertising
solutions on the Internet today. Our marketing
services businesses delivered nearly $4.6 billion
in revenue in 2005, benefiting from growth in all
forms of online advertising. Our reach and
relationship with advertisers’ key audiences, our
unique targeting capabilities, vertical industry
expertise, and ability to provide effective
consumer insights has propelled us to a leading
position in Internet marketing.
We believe we can capture a greater share of
marketers’ advertising budgets as more
advertising spending moves online, compelling
content grows, inventory is better utilized, and
most importantly for us, as we develop enhanced
platforms and systems allowing marketers to
better optimize their campaigns. In 2006,
we are seeking to improve our search products
through better matching and relevance
algorithms and the addition of more easy-to-use
tools for advertisers and publishers. At the same
time, we are working to deliver new forms of
advertising such as video formats, increase our
targeting capabilities, and enable advertisers to
buy larger campaigns more efficiently.
Yahoo! is the only company with scale and
leadership in both brand and performance-based
advertising. To better serve our advertisers, we
have aligned our sales channels under one
management structure. The primary goal of
these efforts is to do all we can to help
marketers deliver the right message, in the right
format, to the right customer, in the right
environment, at the right time.
Premium Services
Yahoo! has become the leading premium
service provider on the Internet, with 12.6 million
paying relationships as of year end 2005 and
generating over $660 million in revenue in 2005.
Our extensive co-branded relationships with
communication services companies give us the
potential to access more than 75% of U.S.
households by year end 2006, providing the
opportunity to forge deep, content-rich
relationships with our users. We also continue
to add to our premium offerings, which now
include a range of tools for small businesses as
well as a number of consumer-focused products
including our innovative new music service,
personals, sports and more.
Expanding Global Presence
As Internet usage grows worldwide, we are
focused on broadening our geographic reach.
Local versions of Yahoo!’s services are now
available in more than 15 languages and more
than 20 countries and international revenues
account for more than 30% of our total annual
revenue, nearly double the 15% contribution
in 2002.
Yahoo! has evolved into a truly global network,
and we believe China represents one of our
biggest future growth opportunities. In 2005,
we made an important strategic investment
in Alibaba, combining our search and
communications assets with their market-leading
commerce businesses, under the management of
a talented local team. Our partnership with
Alibaba will further strengthen Yahoo!’s position
as a preeminent online destination in Asia, a
region where Yahoo! already leads many of the
most important markets and where rapid growth
in Internet usage is expected to continue for
many years.
In addition, we purchased Softbank’s interest in
our operations in the United Kingdom, Germany,
France and Korea, giving us additional strategic
flexibility to take advantage of growth opportunities
in Korea and Europe and to create more efficient
longer-term operating and tax structures.
We also signed an agreement with Seven
Network, bringing together Yahoo!'s successful
Australian Internet business with the online
assets and television and magazine content of
one of Australia's leading media companies.